Chime settles charges of consumer violations

Challenger bank Chime is resolving charges that it violated a California consumer protection law.

On Tuesday, the California Department of Financial Protection and Innovation announced that Chime, which provides banking and credit-building services through an app, has entered into a consent order. The DFPI asserts that Chime violated the California Consumer Protection Financial Law by "having engaged in unfair acts with respect to consumer financial products or services."

Customer service can be a sticky issue at fintechs and startups, where customer service departments are typically not as robust as those at traditional financial institutions. 

The San Francisco company agreed to pay a $2.5 million penalty to put the matter to rest. Chime must also ensure that customer support is at sufficient levels and available 24/7, train staff appropriately, and create policies around the proper handling of customer complaints. It must also submit annual compliance reports to the Department over the next two years. 

"Our settlement reflects the reality of operating at a large scale in a highly regulated industry, and our belief that timely response to customer complaints is critically important," said Chime in a statement. "The DFPI found 'occasional mistakes' in our responsiveness to complaints between January 2021 and March 2021. We proactively improved our processes to remedy this at the time and implemented the reforms identified by DFPI. This matter has been resolved, and we are pleased to put it behind us."

The DFPI investigated Chime in the first quarter of 2021 after customers complained about their accounts and customer service interactions with Chime. 

"Chime has represented that it has addressed the complaints handling-related issues identified by the Commissioner and continued to improve its customer complaint resolution practices and procedures," notes the complaint. "While the number of mistakes during the Investigation Period was relatively small in comparison to the overall number of consumer complaints received, the mistakes were important to the affected consumers."

Chime's banking services are provided by The Bancorp Bank in Sioux Falls, South Dakota, and Stride Bank in Enid, Oklahoma.